WASHINGTON--(BUSINESS WIRE)--Pay increase budgets at U.S. employers have improved slightly up to 3.0
percent in 2014 from 2.9 percent in 2013 according to the 41st annual “WorldatWork
2014-2015 Salary Budget Survey.” Forecasts show that the average
raise in base pay for 2015 in the United States is projected to be 3.1
percent.

This continues a trend of mildly increasing budgets since the 2009
recession when the average salary budget increase reached an all-time
low of 2.2 percent (mean). Last year, respondents projected that the
2014 average total salary budget increase across all organizations,
employee categories, regions and industries in the United States would
reach 3.1 percent (median: 3.0 percent), but actual numbers fell just
short.

“Salary increase budgets will likely remain close to the 3.0 percent
mark until market forces require employers to raise wages more
aggressively,” said Alison Avalos, research manager for WorldatWork.
“Recovering from the recession is no longer driving employers’ salary
budget planning. Current salary budget increase amounts are less about a
recovery from widespread pay freezes from a few years back and more
about the current marketplace not demanding much growth in the size of
pay increases for employees.”

Most Common Salary Increase Budget Amounts

Organizations continue to converge on budget amounts between 2 percent
and 4 percent, with 85 percent to 90 percent of all organizations
landing there, depending on employee category. The percentage of
organizations not awarding increases has dropped to 2 percent to 5
percent, fairly close to historical levels.

Major Metropolitan Area Data

Responding organizations reported variance in salary budget increase
averages between major U.S. metropolitan areas, although all medians are
at 3.0 percent. While there are no extreme outliers, there are a few
areas that did not follow the national average trend line this year.

The following eight cities reported a decline from 2013 to 2014 by one
to three-tenths of a percentage point in average total salary budget
increases: Detroit; Miami; Minneapolis; Pittsburgh; Portland, Ore.; San
Diego, St. Louis and Tampa, Fla.

Houston, Los Angeles and San Francisco trend above the national average,
at 3.1 percent budget for pay increases for 2014, which represents no
change from 2013.

Pay for Performance

Even though the size of all salary increase budgets, including merit
budgets, remains on the conservative side, there is still good evidence
of differentiation of awards.

“Organizations know that in order to retain top talent, they need to
reward and motivate these important employees,” Avalos said. “They are
doing so by differentiating salary increases and increasing the use of
bonus programs.”

Pay increases for 2014 performance are expected to remain at 2.7 percent
for middle performers (median: 2.8 percent), and climb to 4.1 percent
(median: 4.0 percent) for high performers.

Increased use of Bonus Programs

The 2014 data show that 74 percent of respondents are now utilizing
market-based pay increases. Similarly, sign-on/hiring bonuses, spot
bonuses, retention bonuses and project completion bonuses are all up in
usage over past years, suggesting that organizations are beginning to
pay more attention to retention of employees as the economy continues to
improve. This reiterates what employers’ reported earlier this year in
WorldatWork’s Bonus Programs and Practices survey.

About the Survey

The “WorldatWork 2014-2015 Salary Budget Survey” is the largest survey
of its kind with 5,252 responses from 17 countries representing nearly
13 million employees. (Global
Top-Level Results) WorldatWork collected survey data in April 2014.
Survey respondents are WorldatWork members employed in the HR,
compensation and benefits departments of mostly large U.S. companies.
All data include zero-percent responses. An educational salary budget
survey webinar will be held on Aug. 13.

NOTE: WorldatWork includes zero-percent responses in the
analysis, unless otherwise noted, because a zero represents a decision
not to budget for a program and/or employee category that exists in the
responding organization.

WorldatWork (www.worldatwork.org)
is a nonprofit human resources association for professionals and
organizations focused on compensation, benefits, work-life effectiveness
and total rewards — strategies to attract, motivate and retain an
engaged and productive workforce. WorldatWork and its affiliates provide
comprehensive education,
certification,
research,
advocacy
and community,
enhancing careers of professionals and, ultimately, achieving better
results for the organizations they serve. WorldatWork has more than
70,000 members and subscribers worldwide; 95 percent of Fortune 500
companies employ a WorldatWork member. Founded in 1955, WorldatWork is
affiliated with more than 70
local human resources associations and has offices in Scottsdale,
Ariz., and Washington, D.C.